The ITSM Tool Pricing Ouch-O-Meter

One thing that has surprised me during my initial exploration of ITSM tools is the simplicity of some SaaS based pricing models.

Software licensing options offer vendors the ability to flex their competitive muscles, adapt their solutions to different customers and maximize revenue.

Microsoft is particularly good at this, if you are a left-handed student living in Outer Mongolia – Microsoft has a SKU code with your name on it! To the other extreme, Salesforce.com licensing is remarkably straight forward, if you have fifty users and you want Enterprise Edition – everyone must be on Enterprise Edition.

The counter to this simplicity is that customers might end up paying for development of software that they don’t use, but I think this is easily outweighed by simplicity and predictability. No hidden surprises and endless fiddling about with licensing scenarios.

Moreover, for a SaaS based subscription model it is in the interests of the vendor to ensure you are a happy customer, rather than the vendor constantly trying to sell the next upgrade or option. Vendors are more interested in longevity and retention over winning the big deal, in theory at least.

The KISS Principle

I was pleasantly surprised to see some SaaS based ITSM vendors offering one simple price per user per year. For everything. I’m not the sharpest tool in the box so I’m all for keeping things simple when the opportunity presents itself. KISS.

Being this crystal clear over licensing represents a significant paradigm shift for some traditional ITSM tool vendors. It is difficult to wean yourself from high margin professional services revenue when you have grown used to it – how will that revenue be replaced if we simplify everything for our customers? Similarly some vendors position relatively low cost ITSM tools specifically to generate new business for their consulting business.

Eyes Wide Open

I believe pricing simplicity should be a serious consideration when choosing a tool vendor. I have compiled a quick pricing ‘Ouch-O-Meter’ to help during the tool selection process. Click on the image above to enlarge it.

I’m not saying that SaaS is the only way to go, nor am I anti-consultant (being one myself) – I just like the simplicity of the licensing model. I believe how things are priced moving forward should be a serious consideration when exploring a new vendor relationship, there is nothing worse when securing a great deal than to find the hidden extras.

Am I entering into an ‘all you can eat’ license or a ‘We’re going to nickel-and-dime you every time you breath’ relationship?

Have I missed anything here? What else should be considered when it comes to vendor pricing?

Martin is also founder and Chair, Campaign for Clear Licensing. A contributor to the British Computer Society (BCS) Configuration Management Group and contributor to the UK itSMF UK Service Transition SIG.
Learn more about him here and connect with him on Twitter or LinkedIn.

Absolutely, KISS is a mantra for the best ITSM solutions from a licensing/pricing perspective. It’s easy to tally the number of IT users and associate cost in named or concurrent licenses.

KISS is also important from a functional perspective.

If an ITSM solution is truly SaaS and truly Codeless, then those Maintenance (Yellow), Upgrades (Orange) and Professional Services (Red) shouldn’t exist. KISS should include short and long term solution functionality.

For example, with SaaS + Codeless the customer will get seamless patches, fixes and all upgrades included as well as the ability to codelessly configure and customize the solution on their own without the need to know any programming languages such as java script or rely on expensive consultants.

http://www.itsmartdesk.com Maff Rigby

Great article! I agree with Evan – SaaS based solutions should exist totally in the green area, and therefore relatively ‘ouch-less’

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